Sesame posts £9m loss, loses quarter of investment advisers

Sesame Limited has posted a £9.3m loss before tax for 2012 after being fined more than £6m by the Financial Conduct Authority for mis-selling Keydata products.

The pre-tax figure represents a loss almost four times the £2.4m loss posted for the previous year.

The £6m fine is also £2m more than the £4.1m trading profit posted for 2012 by parent company Sesame Bankhall Group.

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In its investigation the FCA found that the “vast majority” of Keydata sales to 426 customers between July 2005 and June 2009 were flawed due to mismatches between clients’ risk appetite, investment objectives and the products sold.

According to the company’s accounts, Sesame Limited also agreed “to conduct a past business review of pension transfers between 5 July 2010 and 21 September 2012 to determine any client detriment”.

Sesame attributes a 26 per cent fall in “designated investment” advisers in the network from 1,202 to 882 to attrition following the Retail Distribution Review, together with other factors “such as a hardening professional indemnity insurance market and increasing regulatory costs.

“This has resulted in an increase in the number of advisers across the industry either leaving or reducing their regulatory permission,” the filing states.

This seems to fly in the face of data released by the Financial Conduct Authority showing a 6 per cent rise in the number of advisers since the beginning of the year and the implementation of the RDR.

However, it accords with data suggesting the number of advisers belonging to networks fell almost 7 per cent over the same period.

The number of mortgage and general insurance advisers, on the other hand, grew by more than 30 per cent from 1,020 to 1,370, leaving the company with a net adviser count greater than that of the previous year.

During the year Sesame upheld 631 complaints, representing 12 per cent of all complaints received by the company. In the previous year Sesame upheld 517, or 17 per cent of total complaints.

Sesame attributes this fall in upheld complaints to spurious claims generated by claims management companies, particularly in the wake of the payment protection insurance mis-selling scandal.

However, as of 31 December 2012 the company had set aside £12.1m to cover payouts for upheld complaints, almost £5m more than was set aside at the beginning of 2012. In 2012 Sesame paid out £10.6m in claims, down almost £1m from £11.4m paid out in 2011.